Purpose – To investigate the impact of land tenure on housing values in metropolitan Kampala.
Design/methodology/approach – A hedonic model is used to test the relationship between housing prices, land tenure and housing attributes using a cross-sectional dataset of transaction prices for 590 newly built houses sold in 2011.
Findings – Public leaseholds in Kampala offer a premium of 23% in housing values compared to freeholds. This could be due to lack of formal systems for assessment of leasehold premium and ground rent charges, an arrangement which can offer utility to the lesse at the expense of lessor thereby making leaseholds popular on the market, or the developers’ lack of information on the benefits of freehold causing them to value leaseholds higher than freeholds. Similarly, private mailo tenure offers a 12% premium in housing values compared to freeholds. There is no significant impact of Kabaka’s mailo tenure on housing values. When compared to private mailo, public leaseholds offer an 11% premium in housing values.
Practical implications– There is need to advance leasehold as the urban land tenure for Uganda, disentangle multiple-layers of ownership on mailo land and roll out the land fund to enhance growth of the housing market in Kampala.
Originality/value –This paper is the first of its kind to empirically examine the impact of mailo land tenure on housing values. Findings provide useful insights for investors and policy makers in the housing sector in Uganda.
2015. Vol. 8, no 3